There are quite a few causes of inaccuracies that could be hurting your credit history. Before you start blaming yourself for missing a payment, overlooking a hospital bill or carrying a credit card balance, think real hard. A Consumer Protection Financial Bureau (CFPB) report from December 2012 listed a bunch of causes of credit report inaccuracies.
Look for documentation that you made a payment because any one of the following causes could be damaging your credit history.
Humans operate the furnishers — such as a credit card company or an auto finance company — that provide information to the nationwide consumer reporting agencies (NCRAs). For the purposes of the CFPB’s report, the NCRAs were Transunion, Experian and Equifax.
Furnishers’ information pertains to their transactions with consumers. For example, a credit card company tells Equifax your Social Security number (SSN) to get this line of credit in your report.
Well, mistakes happen. It can be as simple as misspelling your name or messing up your SSN. The problem? An “orphan” credit file originates that is separate from your actual credit file. Worse yet, a data error can lead to mixing two consumers’ credit files.
NCRAs may not match your credit file if you start a new line of credit. This may be due to a name change or a credit lender (e.g. a credit card company or bank) not providing identifying information, such as your date of birth or SSN.
Common examples include consumers who change their name after a marriage or divorce. Family members with similar identifying information like a name (Jr., Sr.) or who live at the same address often have files overlap when they should not.
Say you disputed an error on your report with the credit bureau that had the error on file. If that bureau fails to correct the error, the NCRAs would have no record of the correction. Your credit report takes the hit. A host of errors may arise as a result, such as:
- An account with you listed as the owner when you’re only an authorized user
- A payment being incorrectly attributed
- Closed accounts listed as open
- Credit limits being incorrectly reported
- A payment not being listed
- A failure to update credit records, such as a resolved tax lien being listed as open
A clever criminal can start a new account — credit, utility or health care — in your name. Then the thief doesn’t pay for it. Accounts like this go delinquent, forcing collection agencies to take over. Meanwhile, your credit score dives.
Identity thieves can also take over your account. They hide by changing the billing address. Tons of these criminals buy things online. Worse yet, identity thieves can use your SSN, last name or birthday to create fake identities. As a four-time victim of identity theft, I can say it’s painful. Thankfully, I’ve been able to catch it before it affects my credit history, but you must be proactive in checking your credit.
Even though you may do the right thing and pay an electric that’s past due, it may not immediately get reported to the credit bureaus. Simply put, it takes time for changes to reflect on your credit score. But if your good behavior isn’t showing up, thus hurting your credit history, it’s time to file a dispute.
Now that you’re enlightened on what causes credit report inaccuracies, it’s time to get to work on disputing problems. If your credit score is already in the high 700s, a 10- or 15-point increase may not be as worthwhile. But for consumers with a credit score of 620 or lower, every point matters.
For some consumers, a 20-point jump could be the difference between being declined a new line of credit and getting approved. Future homeowners want every point possible to ensure they get the best interest rate on their mortgage.
Have you found inaccuracies on your credit report? If so, how did the dispute process go? How many points did you recover on your credit score?
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